Consumer Affairs Victoria say agent underquoting is not a big problem in Melbourne - yet the government of the Sunshine State thinks otherwise.

The Queensland Attorney General, Jarrod Blejie, says ‘‘price-baiting’’ in the southern states is his motivation for introducing radical new laws which will could see agents fined $60,000 for giving a price guide to homehunters for properties up for auction in that state.

"The issue of “price baiting” at auctions, which tricks buyers into thinking a home is within their price range, has become a big problem in other states and that’s what the legislation is designed to prevent," Mr Blejie says.

Queensland Attorney-General Jarrod Bleijie. Photo: Michelle Smith

The plan for denying buyers price guides even has the support of the head of the Real Estate Institute of Queensland, Anton Kardash, who says: "We aren’t going to do it the way it’s done in Sydney and Melbourne and I think buyers will have to come to grips with that."

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Yet it seems that in the eyes of Consumer Affairs, Queensland is overstating Melbourne's problem. Phil D’Adamo, the acting director of CAV, said: ‘‘In terms of the technical requirements of the legislation, we would not consider underquoting to be a significant problem in Victoria,” Mr D’Adamo said.

The CAV figures reveal that of the 75 complaints in relation to underquoting during the 2012-13 financial year (or what people believe to be underquoting), about 90 per cent were not substantiated.

Melbourne buyer's agent Catherine Cashmore.

Based on this data, Mr D’Adamo said the number of substantiated complaints was low when considered in proportion to the overall number of auctions each year.

“Is it a bigger problem in terms of perception and the reserve price? Perhaps,” he said.

Underquoting in Victoria is covered under the Estate Agents Act 1980 and the Australian Consumer Law.

The Estate Agents Act 1980, Section 47C, states agents “must not quote an estimated selling price during the marketing of the property that is less than the lower limit of the range stated in the engagement or authority”.

This means if the price range in the authority is $1 million-$1.1 million, the advertised price range cannot be under $1 million.

Substantial fines apply for breaches of the Australian Consumer Law, with a fine of up to $200,000 for an individual and up to $1.2 million for a corporation.

Consumer Affairs Victoria has taken action 14 times in response to allegations of underquoting since 2008.

Cases included a Sunbury agent and one of its directors fined $22,000 for serious breaches of the Estate Agents Act 1980, including underquoting, in relation to the marketing of two Sunbury properties in 2010.

In the same year, a Footscray real estate agent was suspended for two months for underquoting on four properties.

CAV are yet to advise if other cases were more recent. Melbourne buyer’s agent Catherine Cashmore says even if most vendors and agents are acting legally by keeping their prices guides in line with the authority, these often weren’t figures the vendor would actually sell for.

This issue has also been hotly debated in Sydney this week with a buyer’s agent there, Patrick Bright, calling for reserve prices to be made public a week before a property goes to auction.

Like CAV, NSW Fair Trading says it doesn’t believe underquoting is a serious problem, though it has announced an upcoming discussion paper on the issue.

The last Government campaign against underquoting in NSW was in 2012. This week Fair Trading was ‘‘sourcing archived records’’ to discover what penalties were given to the eight agents who were found to unable to substantiate the price guide they put on 17 properties back then.

Mr Bright’s argument for making the reserve price public a week out from the auction is based on the fact that many homebuyers spend a fortune on due diligence for properties they were never going to afford.

He has many examples of homehunters paying more than $1000 on pest and building inspections, legals and even hiring professional bidders, but then missing out on the property.

Making the reserve public a week out would prevent that.

‘‘I’m 100 per cent behind Patrick on the subject,’’ Ms Cashmore said.

"We want some transparency there because that offers us a clue as to whether we’ve got hope of actually buying the property.”

Mr D’Adamo said buyers should take the time to understand the market to avoid disappointment.

“Meet, understand and form relationships with agents in those particular areas, ask a lot of questions,” he said.

“Go to auctions, bring a notepad, and write it all down and eventually you’ll see start seeing what it’s going to take, and then you’ll be prepared.”